Vietnam textile and garment 10M-2021 – Recovering from the epidemic but still facing many difficult

The textile and garment industry is a labor-intensive industry, so even though production is restored after the epidemic, businesses in the industry are still facing the burden of disease prevention & control costs during their operation. Currently, only about 80-85% of workers return to work.


In Oct 2021, production activities of most product groups recovered faster than expected, in which the production index of the leather and footwear industry increased by 24.52%, the garment industry increased by 15.12% compared to the previous month, while the textile industry only increased by 15.12% compared to the previous month. increased by 1.93% due to being less affected in the recent epidemic. However, if compared to the same period last year, the recovery of footwear and handbags is still slower than other commodity groups.


Production output of footwear, ready-to-wear, and synthetic fabrics has all been higher than October 2020.



After 10M-2021, the export turnover of the whole industry reached 49.56 billion USD, up 8.9% compared to 10M-2020. In which, growth in most items (except for bags still decreased by 5.6%). In particular, exports of fiber (+55.0%) and drapery and technical fabrics (+80.4%) increased remarkably thanks to the benefit of prices due to higher input material prices.


Export turnover of garments increased by 16.1%, footwear increased by 38.1%, handbags increased by 62.8% over the previous month. However, the export value of footwear and leather handbags alone still decreased by 20-30% compared to the same period last year.


With the current momentum of production and completion of export orders, the Textile and Garment Association recently estimated that the export value of the textile industry alone (excluding leather, shoes & bags) in 2021 could reach ~38 billion USD, growth of 8.1% compared to 2020 (in an optimistic case). In which, fiber export is estimated at USD 5.3 billion (+42%) thanks to maintaining high production capacity due to the characteristics of less labor than the rest of the commodity groups, and a high rate of automation while benefited by rising yarn prices. In addition, the export of fabrics of all kinds is expected to reach 2.4 billion USD.


Although production has recovered faster than expected (currently ~80% of workers have returned), demand in export markets is favorable, but enterprises in the industry still face some difficult challenges:


(i) The pressure to increase the price of raw materials (NPL) is causing the cost of each garment and textile product, while it is not possible to increase the selling price of the product in the context of a new market recovery; Sea freight rates are still anchored at high levels. In addition, the supply of NPL from China is also limited because production in this country is stalled due to a power shortage.

(ii) Along with that, being a labor-intensive industry, maintaining the cost of disease prevention and control during operation is also a burden for businesses in the industry.

(iii) In addition, some groups of textiles and garments imported from Vietnam into the EAEU (Eurasian Economic Union) are at risk of being subject to a threshold trade remedy measure due to exceeding the preferential tariff quota threshold as prescribed in the first 7M of 2021. Depending on the amount of exports exceeding the threshold, Vietnam's textile and garment products will be subject to MFN tax for 6 months or 9 months.



Source: Extracted from Vietdata's Textile and Garment Industry Report 11-2021